Correlation Between American Shipping and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both American Shipping and Orient Overseas at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Shipping and Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Shipping and Orient Overseas Limited, you can compare the effects of market volatilities on American Shipping and Orient Overseas and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Shipping with a short position of Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shipping and Orient Overseas.
Diversification Opportunities for American Shipping and Orient Overseas
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Orient is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Shipping and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas and American Shipping is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Shipping are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of American Shipping i.e., American Shipping and Orient Overseas go up and down completely randomly.
Pair Corralation between American Shipping and Orient Overseas
Assuming the 90 days horizon American Shipping is expected to under-perform the Orient Overseas. But the otc stock apears to be less risky and, when comparing its historical volatility, American Shipping is 1.16 times less risky than Orient Overseas. The otc stock trades about -0.25 of its potential returns per unit of risk. The Orient Overseas Limited is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1,370 in Orient Overseas Limited on September 1, 2024 and sell it today you would lose (73.00) from holding Orient Overseas Limited or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Shipping vs. Orient Overseas Limited
Performance |
| Timeline |
| American Shipping |
| Orient Overseas |
American Shipping and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shipping and Orient Overseas
The main advantage of trading using opposite American Shipping and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shipping position performs unexpectedly, Orient Overseas can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Orient Overseas will offset losses from the drop in Orient Overseas' long position.| American Shipping vs. Hapag Lloyd Aktiengesellschaft | American Shipping vs. AP Moeller Maersk AS | American Shipping vs. AP Mller | American Shipping vs. COSCO SHIPPING Holdings |
| Orient Overseas vs. Legacy Education | Orient Overseas vs. Apple Inc | Orient Overseas vs. NVIDIA | Orient Overseas vs. Microsoft |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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